Monday, November 1, 2010

Dispute Over $44 Million Contract Shows War Dogs Are Now Big Business


Contracts for providing the military with explosives, narcotics, and cadaver detection dogs, as well as patrol and sentry dogs, are becoming lucrative, with one contract reaching $44 million and another, just a month ago, $34 million, both going to the same contractor. With success comes competition, however, and with competition come disputes, with disputes come lawsuits, and lawsuits mean work for lawyers, unquestionably a good thing. (One must pay homage to one's guild from time to time.)

What the Army Expects from Dog Team Contractors
Contract working dogs (CWDs) are to be distinguished from military working dogs (MWDs) owned by the military. CWDs are provided by contractors as patrol dogs, narcotics detector dogs, and explosives detector dogs for work at Kandahar Airfield and throughout southern Afghanistan. There were at least 220 CWD dog teams in Afghanistan by July 2010, and the number is rapidly increasing. The picture shows a CWD team posted on an Army website.

To meet CWD contract requirements, dogs must be at least one year old and no more than seven years, and “similar in size to the German Sheppard,” though other breeds are permissible. Contractors are responsible for off-post kenneling, meaning that the U.S. Army Military Kennel Master does not provide kennel services. Each dog is to be deployed with a dog crate that can be used as a temporary kennel when necessary. Travel is paid for by the contractor, even on military planes. Naturally, such costs would be factored into contractors' bids.

Explosive detector dogs (EDDs) sent to Afghanistan must maintain a 95% proficiency rating in detecting a specified list of explosives:

• Commercial dynamite (Gelatin and Ammonium Nitrate)
• Military dynamite
• Water gel (TOVEX)
• TNT
• Smokeless powder
• C-4
• Detonating cord
• Potassium chlorate
• Sodium chlorate

Canine Explosive Scent Kits (CESKs) are provided by the Army. If other explosives come into common usage by enemy forces in Afghanistan, contractors have at least 30 days to attain detection proficiency once the explosives are identified. Certification of dogs to the 95% proficiency level is made by an Army official (CJTF-101 MWD Program Manager). In a Federal Claims Court case described below, it was revealed that in 2008 the Army had only one person acting as a canine certification authority in Afghanistan.

Narcotics detector dogs are to maintain a 90% proficiency level (5% lower than EDDs), and must be able to detect concealed marijuana, hashish, heroin, and cocaine.

Patrol dogs must be able to stay at heel off-leash and attack only on the command, GET HIM. They must be trained to attack a person wearing an arm protector positioned at least 40 feet away, using a bite and hold method. Dogs can attack without command if a subdued person attacks the handler or the dog itself. On the command OUT, the dog must cease pursuit and return to the handler if commanded to HEEL. The description of services provided to potential contractors states that a patrol dog’s ability to continue an attack despite gunfire is critical. The dog must be able to detect the scent of a person hidden 50 meters upwind and follow the odor to the person’s location, and must also be able to detect and respond to a sound made by a person 100 feet downwind.

Four hours of proficiency training are to be provided by the contractor to each team each week. There is to be one handler per dog and the contractor must “replace lost capability within 15 days.” Contractors are to have contingent teams to replace a working team no longer deployed due to death, injury, vacation, decertification, or any other reason. Dog teams must be able to operate in “Hostile Fire or Imminent Danger Areas.” Canine personnel can be required to work “in excess of 10-hours each day, 6-7 days a week based on mission need,” including federal holidays.

The description of services specifies that CWDs need a diet significantly different from that of pet dogs and states that dogs should be fed “a food the same as or similar to, Hills Science Diet, NSN: 8710-01-415-6950.” That seems like a plug a marketing department should be able to do something with.

The contractor’s kennel master is an important part of any proposal submitted by a contract bidder. This person must have at least six years prior experience as a senior military or civilian working dog handler and two years experience as a kennel master. The kennel master participates in strategy sessions and must have “a valid and current security clearance SECRET, minimum, in order to attend specific Government meetings.” Handlers assigned to work with U.S. or Canadian Special Forces are also expected to have “SECRET security clearance for access to classified information from US, Britain, Canada, and Australia (4 EYES).” Handlers are to be certified and proficient in both long and short-barrel weapons. The contractor is required to supply uniforms that distinguish handlers as its employees. Performance Work Statement (June 5, 2008).

Contract Dispute Reaches Federal Court
Disputes over a large contract began in October 2007 when the Army solicited bids for additional CWD services in Afghanistan (RFP # W91B4L-08-R-001). American K-9 was the incumbent contractor providing CWDs to the Army’s Special Forces in Afghanistan. EOD Technology, Inc. (EODT) also provided CWDs for use in Afghanistan, but not to the Special Forces. (According to a page on EODT’s website, the organization provides de-mining dogs for “local Afghan deminers.”) American K-9, EODT, and RONCO Consulting Corp. submitted bids. In December 2007, the Army awarded the contract to EODT. American K-9 and RONCO protested the award to the Government Accountability Office (Protests B-311008.1 and B-311008.2). RONCO has been mentioned in a prior blog (August 20, 2010).

Following the protests to the GAO, the Army terminated the contract with EODT and canceled the underlying solicitation, but then issued a new solicitation on February 10, 2008, this time specifying that in addition to the Army, the dogs would be supporting the NATO International Security Assistance Force Regional Command. The request sought two trained and certified patrol/narcotics detector dogs as well as explosives detector dogs (EDDs). The number of EDDs sought is redacted from the case where the dispute ended up, as are other facts perhaps deemed sensitive by the Army. Four offers were received to the February 2008 solicitation, The Army chose EODT (Contract # W91B4L-08-M-0232).

American K-9 again filed a protest with the GAO and again the Army stopped the contract, issuing a statement that it had become aware “of several problematic issues which threatened the viability of the solicitation.” Two days later, on March 28, 2008, the Army asked American K-9 to submit a proposal for a “sole-source, six-month bridge contract” to provide canine detection services. The Army entered a Justification and Approval for Other Than Full and Open Competition (FAR 6.302-2(a)(2) in the General Services Administration Federal Acquisition Regulations). The Army said that American K-9, as the incumbent contractor, was the only CWD supplier in a position to satisfy the immediate need “with no mobilization lead-time required.”

American K-9 was then awarded the contract on March 31, 2008, and EODT took its turning filing a protest with the GAO (GAO Protest B-311349.2). EODT’s protest triggered an automatic stay of performance on the contract, and on April 6, 2008, the Army issued a stop-work order to American K-9, but provided American K-9 with a three-month, sole-source “interim” contract. On April 8, the Army decided that the six-month, sole-source contract (W91B4L-08-M-0257) could proceed despite EODT’s GAO protest, saying that there were “urgent and compelling circumstances that significantly affect the interests of the United States and its Allies, and will not permit waiting for the GAO’s decision on the protest.”

EODT, seeing the GAO protest wasn’t working, filed suit in the Federal Claims Court.

The court began to sift through the evidence, including the history in the preceding paragraphs. It noted that after a certain redacted date, NATO would not be using CWDs in Afghanistan. Only the U.S. would be using these dogs. It was not explained why other forces would not be using CWDs, though the Federal Claims Court found that the need for CWD teams in Afghanistan was rising.

The legal issue boiled down to the Army’s ability to override a stay by the GAO, which required that the Army establish that the best interests of the United States outweighed Congressional policy. The Army argued that the CWD services could not lapse even for one day, noting that an EDD at one forward operating base had found a redacted but obviously high number of improvised explosive devices (IEDs) in the previous year. EODT, in protesting the award of the bridge contract to American K-9, noted that it also had CWD teams in Afghanistan and could provide the teams required by the Army Special Forces without any delay.

The Army, apparently forgetting its choice of EODT in December 2007, said that it only wanted to use one contractor and that bringing EODT or another contractor in while it was using American K-9 would “negatively impact mission effectiveness.” Further, it said that use of two or more contractors would “disrupt the integrity of the teams currently working together” and “elicit disruption and harmful competition.” Apparently, the handlers of the dogs, if not the dogs, would inevitably get in fights just as the corporations for which they worked were doing.

The Army also said that it had only one certification authority for dog teams in Afghanistan, a Sergeant First Class (name redacted, of course). The Army said that this soldier could only certify a redacted number of teams a week. It was not explained why this soldier could not certify teams from different providers as efficiently as teams from a single provider given that the certification standards are those of the Army, not of the providers.

The claims court decided not to override the bridge contract but said that it could not be expanded from its six-month bridge status to provide American K-9 with a longer-term contract without allowing other bidders to make offers. The Army would have to open up the bidding again. EOD Technology, Inc. v. U.S., 82 Fed.Cl. 12 (Ct.Fed.Cls. May 15, 2008)

Dispute Moves to GAO Turf
On June 13, 2008, a new solicitation was issued (RFP # W91B4L-08-R-0025) to obtain CWD services throughout Afghanistan for one year, with four option years. The Army anticipated needing 50 teams initially (Responses to Contractor Questions, June 24, 2008). EODT was awarded the contract in this round and American K-9 protested to the GAO on August 15 (B-400464, supplemented September 11), attacking the Army’s evaluation of the past performance of the bidders, one of the factors to be considered in awarding the contract. The Army agreed to reevaluate past performance. After receiving letters from the bidders, the Army affirmed its award to EODT.

American K-9, not to be deterred, protested again, saying this time that EODT had not satisfied the experience qualifications required by the solicitation. Among other things, American K-9 argued that the kennel master/project manager that EODT planned to use did not satisfy Army standards. The Army concluded that there was a deficiency but gave EODT the opportunity to update its proposal. The Army also asked American K-9 to update its proposal. EODT provided an updated resume for its proposed kennel master. Meanwhile, the Army also questioned American K-9’s proposed kennel master, saying it had “reason to infer” that the kennel master referred to in American K-9’s proposal was not the one that was going to do the work.

Whether the Army was questioning the qualifications of the kennel masters on its own, or whether some corporate espionage was going on between the bidders, is not clear from the documents publicly available. In any case, American K-9 protested to the GAO that the Army was conducting “results oriented” discussions because it wanted to give the contract to EODT regardless of the merits. The GAO dismissed this protest as premature. EODT had given a price of $38,350,935 for the work; American K-9’s bid is redacted, though said to be “approximately equal” to EODT’s. The Army again preferred EODT.

American K-9 protested yet again, persuading the GAO that the Army’s discussions had not always been meaningful. The Army had not talked to American K-9 about some of the deficiencies it found in the company’s offer. The GAO sustained American K-9’s protest of an award to EODT on May 5, 2009 (Protest B-400464.6) and recommended that the Army request final proposal revisions and make a new source selection.

American K-9 Wins (At Least for Now)
A U.S. contracting website lists the final award given to American K-9 as being for $44,775,558.79 (Award # W91B4N-10-C-5001 to RFP # W91B4L-09-R-0025), though the site contains a pdf of a contract signed by Mark Mahler, President of American K-9 listing the total award amount as $25,830,292.74 (Award # W91B4N-10-C-5001, dated December 11, 2009). The $44 million seems to be the amount most commonly used in press reports. A separate Defense Department website refers to the same award (at least by number) and states its amount as $15 million. The discrepancies may in part reflect guaranteed and extension amounts. Two news releases on American K-9’s website do not list the amount of the award but state that it was the largest CWD contract ever issued.

American K-9’s ability to land government contracts for CWDs continued in 2010. In August, the company was awarded a contract to provide cadaver/human remains detection dog teams to Iraq. In September, it got a similar contract for Afghanistan. Also in September, a contract from the Navy was awarded to American K-9 at $18,426,926, which with contract extensions could reach $34,659,851.

The price for dogs may seem high, but working in danger areas is costly in many ways. EOD Technology had 34 deaths in U.S. government contract work between September 1, 2001, and June 30, 2010. EOD Technology was the subject of some negative attention in a Senate Armed Services Committee Report issued September 28, 2010. Whether this had any effect on EODT's efforts to get canine contracts is unclear.

Additional sources: Abby Brown, Discussions Were Improper When ‘Discussion’ Questions to One Offeror Seemed ‘Contrived’ (June 8, 2009); Kara M. Sacilotto, Is the Game Worth the Candle? The Fate of the CICA Override, The Procurement Lawyer, 45(1), 3 (Fall 2009) (discussing the Federal Claims Court decision and other cases). To see what roadside bomb detection actually looks like, see the excellent video on the website of DiagNose.

Additional Notes. The Associated Press reported on March 17, 2011, that the State Department ended a $274 million agreement with EOD Technology to provide protection for the U.S. Embassy in Kabul because the company was not going to be able to begin performing its functions by May 1. EOD had been selected to replace ArmorGroup North America, whose guards had been caught drinking excessively and engaging in lewd behavior at barracks a few miles from the embassy. ArmorGroup's contract is to be extended until September 2011. The Senate Armed Service Committee has been investigating the role and oversight of private security contracts in Afghanistan.

On December 14, 2010, the Defense Department announced that K2 Solutions, Inc., of Southern Pines, North Carolina, was being awarded a $24 million firm-fixed-price contract for IED detector dog procurement, training, sustainment and conditioning, and handler training. The contract is also to include kenneling and basic care of the dogs. The Marine Corp will designated "team integration training venues," perhaps at Twentynine Palms, near Indio, California. Team integration occurs prior to deployment.

On October 4, 2011, K2 Solutions won an award for providing the Marine Corps with approximately 359 improvised explosives device detector dogs, along with training of 647 Marine Corps personnel annually. The contract (M67854-11-C-3015) award dollar amount was listed as $34 million, but the contract includes options, which if exercised will bring its cumulative value to $91 million. Training will be performed in Southern Pines, North Carolina, Twentynine Palms, California, and overseas. If options are exercised, work will be completed March 2014.  U.S.-trained mine detection dogs are working in Jordan on the Syrian border (AUD-CG-13-42).

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